Module 9: E-Business Systems

Readings
• Chapter 7 in Managing Information Technology
• Eid, M. (2011). Determinants of e-commerce customer satisfaction, trust, and loyalty
in Saudi Arabia. Journal of Consumer Research, 12(1), 78-93. Retrieved from
http://web.csulb.edu/journals/jecr/issues/20111/Paper5.pdf
For Your Success & Learning Objectives
Check the Interactive Lecture in Schoology.

1. Business Systems

E-business systems enable electronic transmission of business transaction or other

related information between a buyer and seller. Dot-coms are businesses that
conduct business solely through their websites and are also known as “single
channel” e-businesses. An example of a dot com is Amazon.com. A “bricks and
clicks” is a company that uses internet sales as an additional channel to an offline
business and is also known as multi-channel. Two examples of “bricks and clicks”
organizations are Target and Wal-Mart. They have physical stores and also offer their
merchandise online.

Everyone knows what the internet is, right? But what’s the difference between
internet, intranet, and extranet? Internet, as we know, is the World Wide Web of
networks, which is accessible to the public and uses TCP/IP protocol to send data
back and forth. Intranets are private networks that operate within an organization
using TCP/IP protocol for sending information, applications, and other tools for use
within an organization. An extranet is a part of a company’s private intranet that is
accessible via the internet to authorized organizations or business partners (like
customers or supplies) outside of the organization.

Internet applications and services are built upon two types of pillars, as you can see
below in figure 7.1 E-Business Framework.

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Brown, DeHayes, Hoffer, Martin, & Perkins, 2012, p. 254

There are all sorts of environmental influences on the growth of the internet, such as
sales tax, laws to protect individual privacy, and antitrust laws. Sales taxes in the U.S.
are applied at the state level, for example, but “location” of purchase is not clear via
the internet. The U.S. government has chosen not to implement an internet sales tax,
which is good for those of us who want to do online shopping. The Asia Trade Hub
website reports that Saudi Arabia also currently has no internet sales tax.

Before the internet was prevalent, B2B electronic commerce used what is called
electronic data exchange (EDI). EDI are proprietary applications for communicating
with trading partners based on agreed-upon standards for business document
transmission. Now, B2B uses extensible markup language (XML) to facilitate data
interchange across applications on the web. It is very similar to hypertext markup
language (HTML) in that it uses “tags” to convey the meaning of data.

Assessing opportunities and threats to preexisting companies due to the influence of

the internet is rather complex. Remember, in Module 7, we applied Porter’s Five
Forces model for IT-led innovations. We will now utilize this model to examine the
competitive forces that could drive an organization to add electronic commerce to
their business model.

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Brown, DeHayes, Hoffer, Martin, & Perkins, 2012, p. 259

Threats and opportunities in e-business are quite different. Examples of potential

internet opportunities for existing companies include procurement of supplies via the
internet, which can increase the company’s power over suppliers. It also potentially
increases the size of the market for a product or service. The other opportunity is that
distribution channels between traditional companies and customers can be
eliminated.
Unfortunately, there are some threats to e-business as well. For example, there can
be an increased number of competitors and the removal of the in-person sales force,
making business “less personal.” Price competition makes it very difficult to keep
offerings proprietary. Also, customers’ bargaining power is increased.
In e-business, there are many B2B applications. If buyers and sellers are fragmented
markets, independent intermediaries are more likely to be needed. If sellers are
concentrated, sellers are likely to dominate. If buyers are concentrated, buyers are
likely to dominate.
There are also many benefits to the sellers. There are multimedia opportunities for
marketing, new ways to research potential markets, global reach to buyers. In
addition, there are new ways to distribute, especially if product/service can be
digitized.

View this video to evaluate a potential strategy for e-business.

E-business Strategy
https://youtu.be/OsRT0tA-1Dg
How to grow and optimize a business via e-business strategies.

Social media is a relatively new phenomenon. Social media includes applications like
Facebook, Twitter, and LinkedIn. Many social media platforms are used for B2C e-
business. Those that have capabilities to brand the company or its products and
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services and have support for sales and customer services make great platforms for
social media. Customers especially like it when they can control their privacy settings.

2. Strategic Planning for a Web-Enabled Business

While anyone can create and implement a website, running an e-business is a very
different challenge. To get there, you need a business strategy focused on a business
model with Web-enabled value propositions and e-commerce driven business
models. Technology is no longer seen as an operational issue but as a matter of
strategic importance. One of the most significant changes in a Web-enabled business
model is that the customer touches your technology before they touch a person. This
requires Web-enabled applications to be as complex as the inner workings of a
customer-facing employee.

The earliest uses of the Web were as a mere point of information. Web 1.0 utilized
static Web pages for information storage and retrieval. Web 2.0 went far beyond
Web 1.0. It enabled organizations to build applications that harness the power of the
Web as an advertising medium, a distribution channel, and customer-service vehicle,
to name just a few applications. Launching a Web-enabled business at once:
establishing a global presence, reduction of time to market, ability to test new
products, and a significant reduction in order processing costs, to name but a few.
While e-business offers great potential with existing and new opportunities, the
creation of a strategic plan is an essential ingredient to long-term success.

Major Elements of a Business Strategy

Developing a business strategy for a Web-enabled business is not unlike a business
strategy for the traditional “bricks and mortar” enterprise. They both contain a mission
statement, a vision statement, and a set of business goals and objectives. To make
these generic elements more situationally relevant,
examine each component within the context of a Web-enabled business
environment:

Mission Statement
Defines and justifies your organization’s existence. All stakeholders need to
understand the mission since it will be the foundation for organizational decision-
making. The internet is a dynamic environment, which requires organizations to
initiate organizational transformations quickly even more so than hypercompetitive
environments. Ensure your mission is not too rigid. Ensure your organization’s
purpose in life can change without significantly destroying your organization’s
identity.

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Vision Statement
Documents not only how your organization intends to fulfill its mission but presents a
forward-thinking view of where management wants to take the enterprise. Web-
enabled businesses using rapidly changing technologies are challenged to foresee
what the future will bring. Attempting to develop representative vision statements in
business environments characterized by rapidly changing technologies becomes
problematic.

Examples of e-business vision statements might be:

• Become the fastest-to-market company in the world
• Encourage innovation, experimentation, and risk-taking
• Reward employees for actions that enable customers’ satisfaction

Organizations can, and sometime do, incorporate a list of their organizational values
in the vision statement. However, recent trends suggest that organizational values are
so important in establishing an organization’s identity that organizations present them
separately. Values define the boundaries of conduct for the organization in pursuing
its mission. They are also powerful influences in engineering business processes.
Web-enabled businesses exist in dynamic environments. As their environment
changes, ensure your new model does not violate the organization’s values.

Business Goals and Objectives

Guidelines for managing, measuring, and reporting the success or failure of your
organization’s mission and vision. Business goals and objectives must be expressed
in term of customer needs. In e-business environments, customer wants and needs
change constantly. Ensure your business systems capture the correct intelligence
information that enables your organization to take action when needs and wants are
not being met. Remember your Web-based technology is your customer contact
experience.

Finally, and a lesson learned through many dotcom failures, ensure all
segments of your organization’s value chain are enabled to support the transactions
originating from the Web. Many dot-com organizations fail because they have
undeveloped business processes for order fulfillment and customer service. Ensure in
your goals and objectives that all areas of the value chain have been considered.

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